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  1. #21
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    Quote Originally Posted by wheelieking71 View Post
    I have miles of input I could give in this here thread. But, I will keep it simple:
    Do not mix your personal, and your business finances. Anything you take from yourself to start your business? Be prepared to consider that money "gone".
    You will not pay it back. No matter how good your intentions. The growing cycle of the new business will not let you.
    Forget borrowing money from a bank. For many reasons. A small business loan is almost impossible to get. I had a $75k/yr full-time job, and 750fico, and they would not even talk to me.
    And a small business loan will most certainly be structured to increase your odds of failing.
    The only way a bank will extend un-secured credit (which is what a small business loan is) is if they stand to make significant profit on that note.
    Its not like a mortgage. They want their money back in 10yrs instead of 30yrs, @10% instead of 3% or 4%.
    You may as well use credit-cards, and play the zero interest balance transfer game (which realistically ends up costing you about 3%)

    It has already been mentioned, leasing a machine with $1 buy-out is really the only option for you that makes sense.
    Knowing the little I know about your background, my advice to you:
    Find a solid HAAS VMC. VF-2 through VF-4. And stick with the software you know. You need to make those payments.
    You will not have time to learn a new CAM in the beginning. When jobs come up, you need to be able to react swiftly.
    You cant react swiftly if you are stumbling around unfamiliar CAM.
    Yes, purchasing MasterCAM is a big hit! But, worth it. Unless you start learning something else now.
    But, when you do launch your own shop, CAM damn sure better not be a bottle-neck.

    Time is money. If you are a little slow because you are new to your CAM, you can not charge for that. Or you will quickly find yourself out of work.
    People kept telling me all the time: "you need to raise your prices" "if you get everything you quote, your prices are too low" bla-bla-bla!

    Well, I am here to tell you, that game is like walking the sharp edge of a razor-blade. I tried raising prices, and quickly found myself out of work!
    You need to know your abilities. You need to know your machines abilities. And you need to be able to accurately predict how long jobs are going to take.
    In order to give accurate quotes, that are competetive. You won't be able to do those things with un-familiar CAM, or un-familiar machine/machine control.

    In the beginning, stick with what you know, elaborate later.
    Im right there with you on the CAM side...

    Yeah that VF Duece would sit pritty nice in here... its always been one of my top considerstaions. Despite the nay sayers... I have a few ten thousand hours on some fairly new and some fairly abused haas equipments and all around I am comfortable with them. Kinda hoping mori prices start dropping over the next year.... lol yeah right

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  3. #22
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    Quote Originally Posted by wheelieking71 View Post
    Forget borrowing money from a bank. For many reasons. A small business loan is almost impossible to get. I had a $75k/yr full-time job, and 750fico, and they would not even talk to me.
    And a small business loan will most certainly be structured to increase your odds of failing.
    ..
    ..
    It has already been mentioned, leasing a machine with $1 buy-out is really the only option for you that makes sense.
    Knowing the little I know about your background, my advice to you:
    Find a solid HAAS VMC. VF-2 through VF-4. And stick with the software you know. You need to make those payments.
    You will not have time to learn a new CAM in the beginning. When jobs come up, you need to be able to react swiftly.
    couldn't agree more^^^
    one thing to consider when going the new VMC lease rout {sic :-)} is that the county will be by your facility or just sending you a bill for the property taxes on the full value on said lease....every year.
    start with something used, over 10 years old IMHO. 2 cents FWIW

    the prototype projects I do on my 2001 VF3 get just as "done" as they would on a showroom new one or some fancy Genos 560 (which is probably the best value in the market... even after the 10k increase recently). ...and i theoretically have the money on a new one in the bank.

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    I don't know if MasterCAM has a rental program. I know somebody besides DelCAM/FeatureCAM does. But, it is worth checking in to.
    I did not have $13,500 to purchase FeatureCAM after I bought the first mill. Then my local sales rep. brought their rental program to my attention.
    The numbers for a full seat of FeatureCAM (full 3-D with basic surface creation and 2-axis turning (no solid modeling)) was $530 month rental payment.
    You had to sign up for a 6 month minimum. At the end of that you had the option to purchase, quit, or continue renting.
    The kicker was, 50% of your rental payment could be put towards the purchase. I ended up renting for one year, then purchasing, at which point I had $6360 in rental credits towards that $13,500 nugget. The catch is, the 50% credits stop at one year. Even though you can keep on renting if you wish.

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    Quote Originally Posted by wheelieking71 View Post
    I have miles of input I could give in this here thread. But, I will keep it simple:
    Do not mix your personal, and your business finances. Anything you take from yourself to start your business? Be prepared to consider that money "gone".
    You will not pay it back. No matter how good your intentions. The growing cycle of the new business will not let you.
    Forget borrowing money from a bank. For many reasons. A small business loan is almost impossible to get. I had a $75k/yr full-time job, and 750fico, and they would not even talk to me.
    And a small business loan will most certainly be structured to increase your odds of failing.
    The only way a bank will extend un-secured credit (which is what a small business loan is) is if they stand to make significant profit on that note.
    Its not like a mortgage. They want their money back in 10yrs instead of 30yrs, @10% instead of 3% or 4%.
    You may as well use credit-cards, and play the zero interest balance transfer game (which realistically ends up costing you about 3%)

    It has already been mentioned, leasing a machine with $1 buy-out is really the only option for you that makes sense.
    Knowing the little I know about your background, my advice to you:
    Find a solid HAAS VMC. VF-2 through VF-4. And stick with the software you know. You need to make those payments.
    You will not have time to learn a new CAM in the beginning. When jobs come up, you need to be able to react swiftly.
    You cant react swiftly if you are stumbling around unfamiliar CAM.
    Yes, purchasing MasterCAM is a big hit! But, worth it. Unless you start learning something else now.
    But, when you do launch your own shop, CAM damn sure better not be a bottle-neck.

    Time is money. If you are a little slow because you are new to your CAM, you can not charge for that. Or you will quickly find yourself out of work.
    People kept telling me all the time: "you need to raise your prices" "if you get everything you quote, your prices are too low" bla-bla-bla!

    Well, I am here to tell you, that game is like walking the sharp edge of a razor-blade. I tried raising prices, and quickly found myself out of work!
    You need to know your abilities. You need to know your machines abilities. And you need to be able to accurately predict how long jobs are going to take.
    In order to give accurate quotes, that are competetive. You won't be able to do those things with un-familiar CAM, or un-familiar machine/machine control.

    In the beginning, stick with what you know, elaborate later.
    This is almost identical to my own experiences. The only difference I can offer is that the dance of the razor blade is more lively than one might expect, though my experience with it concluded slightly differently. I did end up raising my prices. And in all honesty and fairness, I did stop getting some of the work I was getting before that. But I also started getting better work. That is not to say that wheelieking71's experience is in any way wrong or incorrect. Just that it illustrates just how starkly different other people's experiences can and will be from what you ultimately experience for yourself.

    There is no simple answer. If it were easy, everyone would do it. ( and be successful at it )

    By and large though, I agree 100% with the rest of it.

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    The whole cam thing, are you doing something complex enough to really need it? Im tight yes, but by just using a simple 2d cam and writing the 3rd D my self im already shit ton of money ahead at least for the simple parts i do. Yeah if i was doing complex shit, it would not work, but the simple work i do its a great match for. 99% of my milling is simple 2d profiling. I have done more than a bit of simplistic 3d stuff by just slicing it up in can and running multiple Z depths of 2d cam programmes. Copy, paste and a txt editor are all no cost just a little time.

    4th axis, yeah if your using it in the cut, it gets complex fast, but if its just a positioning tool, cams a luxury!

    My advise, for year 2 in buis, don't get too big too quick, let things grow at the pace they want too. Equally right nows not the time to be flying in the corporate jet machinery wise, its more time to be running the smoky banger of a truck, both for transport and machinery wise. You have a wife and family, don't go tradeing all your efforts for just flash machinery, you need to bring home the bacon too. More than a few people seams to spend most of there companies money on machinery, yeah it makes the job easier, it makes it far easier to compete, but theres no point turning over a million or two and still living on beans ;-)

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    Quote Originally Posted by allloutmx View Post
    If and when the job allows it, I could have my, full time, stay at home wife load the vices during the day. Im also hoping that within a year of owning a real deal CNC, Ill be busy enough to go full time solo. My oldest is almost 3, soooo maybe only another 2 years or so before I can get her loading parts.
    I have multiple customers who have financed when still employed. Some post here. You need two years with the business on your tax return before most machine tool finance guys will touch you but there are some that offer some financing before then. You just pay for it. If you want a great brokers name send me a PM.

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    Here is another unconventional possibility. The distributor I worked for took trade ins. For customers they knew they would give you a 0% 12 month loan on certain trade ins. Maybe you have something similar near you.

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    There is a TON of lenders and a TON of money floating around out there. In this climate lenders are really looking for capital equipment borrowers. Go direct with a loan as direct as possible unless either the better lenders (AKA US bank) doesn't have a presence in your state. If they don't have a presence in your state they will not borrow to you and youll be stuck with a broker. But there are also predatory lenders like ascentium capital. Lenders like these guys prey on the fact that what they hold over the note is less than a good lawyers fight. If your paying over 8% for any load right now your paying MUCH more interest than you should be.

    Consider that debt management will be a part of growing a small business for a long time. Don't worry about the best, fastest, or most expensive machines to get you going. If you do then you have become a machine snob and have lost focus on making money rather than sight seeing the business as it travels out of big debt.

    Also on the used side of machinery...TRUST NO ONE! Even the old names in machine tool will misrepresent and coerce you into signing a purchase agreement. Believe me when I say TRUST NO ONE. Verify all things youll need to make an informed decision and don't worry about spending a couple bucks to get 2 different inspectors inspecting a machine. It is your ass on the line, your life, your kids, your grand kids and the future of your family long after your gone. Due dilligence

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    As he mentioned - US Bank IS the bank that is backing the note.
    Many, and prolly the large majority of the lease companies are selling the notes to banks when it's finalized. If there is an "aw-Shiite" in your future, it is much harder [as a rule] to punt in any way with most lease companies. They will at the very least be slow to react to issues.


    ----------------

    Think Snow Eh!
    Ox

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    Quote Originally Posted by IAMATT View Post
    Consider that debt management will be a part of growing a small business for a long time. Don't worry about the best, fastest, or most expensive machines to get you going. If you do then you have become a machine snob and have lost focus on making money rather than sight seeing the business as it travels out of big debt.

    Also on the used side of machinery...TRUST NO ONE!
    In red ^^^^^^ I strongly agree!

    There is huge hidden value in HAAS's parts availability, and cost. Believe the cost or not, its true. HAAS parts are cheap.
    And, just ask Bobw, there is huge hidden value in fixing your Fadal at the local NAPA.

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    Ill be the first to admit.. Im a bit spoiled from the day job. But in not ashamed to run something used and less snooty. I just dont want to spend money on a tool that is going to require a lot of time maintaining. I know im not telling you guys anything, but there just isnt enough time in the day to get caught in that sort of position. Certainly used equipment is a very real option and almost certainly the better of the two if I can raise the cash.

    As far as CAM and complexity of my work goes... im sure I could get away with a "2d" cam seat for a lot of the contract work I would be doing but there is a fair amount of surfacing work involved with most the prototype work, and beyond that I am trying to develop my own consumer products, where again I would like to have the surfacing capabilities.

    IMO, For what I do, CAM is as important as the machine tool itself. I look to it as often as I do my 6" scale. Not everyone feels the same way, but its just what I use to get the jobs done. I understand to a degree it is certainly a luxury, but I have stumbled through complex 5 axis programs with a 2d CAM seat more than once, and from my experience, the extra 8 grand would have been money well spent.

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    Quote Originally Posted by allloutmx View Post
    Ill be the first to admit.. Im a bit spoiled from the day job. But in not ashamed to run something used and less snooty. I just dont want to spend money on a tool that is going to require a lot of time maintaining. I know im not telling you guys anything, but there just isnt enough time in the day to get caught in that sort of position. Certainly used equipment is a very real option and almost certainly the better of the two if I can raise the cash.

    As far as CAM and complexity of my work goes... im sure I could get away with a "2d" cam seat for a lot of the contract work I would be doing but there is a fair amount of surfacing work involved with most the prototype work, and beyond that I am trying to develop my own consumer products, where again I would like to have the surfacing capabilities.

    IMO, For what I do, CAM is as important as the machine tool itself. I look to it as often as I do my 6" scale. Not everyone feels the same way, but its just what I use to get the jobs done. I understand to a degree it is certainly a luxury, but I have stumbled through complex 5 axis programs with a 2d CAM seat more than once, and from my experience, the extra 8 grand would have been money well spent.
    No offense to anybody. This is solely my opinion. But, it is a strong one, based on solid, proven, logic.
    Anybody that argues against CAM for anything more than 2-axis lathe work, is a fool.

    Budget CAM in up front. You need it. You know you need it.

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    Fanuc Robodrill CNC 3-Axis Machining Center

    Say the word and I'll go pick it up for you

    Great machine to transition from your protrak and then when you are ready for more this will be THEE second op machine.

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    401k withdraw. Has already been talked about. 401k loans - watch out. You'll be paying back tax deferred $$ that are making you $$ with post tax funds. Also you'll probably be paying 6-7% interest.

    Now the kicker:

    If you have a 401k loan and you quit/lose your job. A lot of plans have a provision to force full repayment in a lump sum since you aren't with that company any more. You can't pay? Then your outstanding balance is treated as a distribution and you're liable for the early withdrawal penalty plus you'll have to pay taxes on it next cycle.

    Don't do it!!

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    The success statistics on those 401k withdraws and loans are pretty horrible. It's usually a last act of desperation or a first act of a really bad plan.

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    Quote Originally Posted by dstryr View Post
    Fanuc Robodrill CNC 3-Axis Machining Center

    Say the word and I'll go pick it up for you

    Great machine to transition from your protrak and then when you are ready for more this will be THEE second op machine.
    Wow. One maxed credit card and you're in business.

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    I would caution you about borrowing too much money at this point in your business venture. If you borrow $100,000, the financial institute will expect a pay back rate of probably 5yrs. At 8% interest and a 5yr amortization you will have a payment of approx $2400mo. for 60 mo. You might get a better interest rate and lower the payments some what but even at 0% your payments will still be $1666 mo. Remember that principal payments are from taxed income. Depreciation helps somewhat but it is still an unseen cash expense that will eat you eventually unless you are paying the loan off quicker than the actual depreciation.

    Cam software is important to have, however there is a substantial cost of ownership. Most software packages are in the realm of a 10% annual maintenance fee that does not go away plus the initial purchase price. This is pure overhead that you are adding to your business. The problem is that you're paying for the software by the user seat not machine seat. So for your situation you will be incurring an overhead cost at 4 times the rate you would be if you were full time. 40hr. part time vs. 160hr. full time per mo. If you have more than one machine this overhead is spread over even more machines so the cost goes lower yet.

    Now if you look at what would happen if you purchase a used machine and pay cash or close to it. Since you already can make the $1666/mo. payment, we will say that you save that money up for 12 mo. That would give you almost $20,000 cash to purchase or help purchase a good used machine, especially if we are entering a recession. At the end of yr. 2, you would have enough cash to pay for the CAM package that you need. Now a $20,000 machine might not be exactly what you want but the idea is to convert your time and the machines time into cash in your pocket not someone Else's.

    The problem with doing this is that you will have to dedicate this much of your business's profits for the next 5yrs. If you are charging $60/hr. for your shop time, this means you would need to put 100% of 40hr.s a month income just towards servicing the debt. This would not allow you to be doing anything else, just like Ox said.

    You have not said how many hours of work a month you are doing. Not that it is any of our business but I think it is important to point out that getting enough work to fill in 40hrs. a month is easier to do than getting enough work to fill in 160hrs. a month. Your profitability at 40hrs. and a day job will be much greater than working 200hrs. a month in your own shop unless you have some really good work. Also you need to keep in perspective that at 40hrs./wk of run time will put 10,400hrs. on the machine. If you can only put 40hr./mo on it you will only have put 2600hrs. on it. How much is a low hour 5yr. old machine worth? It will definitely not be worth 4X of the 10,400hr machine. Low hour machines are almost always good buys but almost always bad sells.

    At some point, you will need to quit the full time job and go 100% on your own. When this happens, you will need to be able to pay yourself your current wage plus benefits plus all of the taxes. This will be tough to do with the substantial payment that you would be servicing.

    Now if you go the used route and basically pay cash for things as you go or close to it, what happens if things get really slow for your business? Nothing probably since very little income will be needed to cover overhead. Compare that to the scenario with that nice new machine payment. You will need to make that payment every month no matter what. Yeah, a local banker will probably give you a little wiggle room in a worst case scenario. They don't want to repossess equipment either, it's a pain for them.

    As others have said, it is easiest to build your business with the help of income from your other job. It is also important to realize that those smoking deals that you can find at auctions, dealers and even on private sales are coming at the original purchasers expense. When you get the desire to smell new paint and feel a nice new machine, remember how much the difference between the new purchase price is and the smoking deal price is. That is the amount of money you will have at risk on the new purchase. That amount starts at somewhere around 25%-50% and tapers to zero by the time 5yrs. is up. You need to ask yourself before signing the deal, am I willing and able to walk away from half the value of this new machine? Not to say that that would happen but it is a possibility that needs to be recognized as a possibility.

    I am not trying to sound negative but looking at you as a young guy that has a lot of ambition and wants to get his own business going. The problem as I see it today is that manufacturing is dramatically changing and in ways we do not yet fully appreciate. These changes are going to make some old rules of thumb for prognosticating very inaccurate. The challenges that the oil patch is just starting to be faced with will probably be spreading to other areas. The need for job shop work is only going to get more competitive. The issue boils down to that there is excess capacity in manufacturing today. This is causing a degree of price competition between machine shops. The difficulty with this is that the cheapest guy will get the job and the customer still gets their minimum markup or greater on the work that you or your competitor is doing. The customer has the profit potential automatically. It is up to you to figure out how you can put cash in your pocket by doing the work. There are a variety of ways to accomplish the end goal, you just need to keep the goal in view. This might mean a new machine but it also could very likely not be a new machine.

    Good luck in your choices.

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    I did not read that as negative. I really think that a closer debt prespective is something that counteract passion for performance. But big oil will take its toll. I dont know how much of an impact it is making except for raw stock which was down 60% last year. It definately represents a big chunk but not all will feel the effect.

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    Quote Originally Posted by dstryr View Post
    Fanuc Robodrill CNC 3-Axis Machining Center

    Say the word and I'll go pick it up for you

    Great machine to transition from your protrak and then when you are ready for more this will be THEE second op machine.
    If go with a robodrill at least get the 16i MB with the PCMCIA CARD to be used as a data server,

    The 16M Fanuc SUCKS...

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    Quote Originally Posted by solidworkscadman View Post
    If go with a robodrill at least get the 16i MB with the PCMCIA CARD to be used as a data server,

    The 16M Fanuc SUCKS...
    Calmotion box would solve that. Great machine that I'm sure could be had for $10k


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